Peak Physique Franchisor Group Pty Ltd v Gravity Rebellion Pty Ltd
[2024] QMC 10
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- Unreported Judgment
- Peak Physique Franchisor Group Pty Ltd v Gravity Rebellion Pty Ltd[2024] QMC 10
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Peak Physique Franchisor Group Pty Ltd v Gravity Rebellion Pty Ltd[2024] QMC 10
Peak Physique Franchisor Group Pty Ltd v Gravity Rebellion Pty Ltd[2024] QMC 10
MAGISTRATES COURTS OF QUEENSLAND
CITATION: | Peak Physique Franchisor Group Pty Ltd v Gravity Rebellion Pty Ltd & Ors [2024] QMC 10 |
PARTIES: | PEAK PHYSIQUE FRANCHISOR GROUP PTY LTD (Plaintiff) v GRAVITY REBELLION PTY LTD ACN 619 846 794 (First Defendant) & SUZANNE BURTON (Second Defendant) & LIAM BURTON (Third Defendant) & SUZANNA JANE CALAVA (First Defendant by Counterclaim) & MICHAEL CALAVA (Second Defendant by Counterclaim) |
FILE NO/S: | 316/21 |
DIVISION: | Civil |
PROCEEDING: | Trial |
ORIGINATING COURT: | Brisbane Magistrates Court |
DELIVERED ON: | 01/08/2024 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 25/07/2023 |
MAGISTRATE: | J. Pinder |
ORDER: | (1) - I give judgement for the first, second, and third defendants as against the plaintiff and the first defendant added by counterclaim and second defendant added by counterclaim in the sum of $150,000. (2) - Interest and costs I direct that any submissions in respect of interest on the judgement debt or costs by the parties be filed within 10 days, the written submissions to not exceed 5 typed a4 pages. |
SOLICITORS: | Morgan Mac Lawyers for Plaintiff No appearance by Defendant |
INTRODUCTION
- [1]The plaintiff Peak Physique Pty Ltd brought suit claiming as against the first defendant $2,170.97 for monies due and owing (for debt and liquidated damages) and $46,897.61 for liquidated damages.
- [2]The plaintiff’s pleaded claim is on the basis of an agreement “Peak Physique Hot Yoga Franchise Agreement entered into between the plaintiff and the defendant.”
- [3]The plaintiff has claimed against the second defendant and third defendant (Suzanne Burton and Liam Burton) on the basis of personal guarantees allegedly given by the second and third defendants guaranteeing the performance of the first defendant under the agreement.
- [4]The first, second, and third defendants’ defence is on the basis that any breach of the franchise agreement occurred consequent on the impact of the COVID-19 restrictions imposed including closure of the business premises to the public which was operated by the first defendant’s franchise business. The first, second, and third defendants’ counterclaim against the plaintiff and against the first defendant added by counter claim, (Suzanna Jane Calava) and the second defendant added by counterclaim (Michael Calava).
TRIAL
- [5]The matter had a lengthy history involving a number of interlocutory applications.
- [6]The action was ultimately listed for trial on 25 July 2023 at which time neither the plaintiff nor the first and second defendant by counterclaim appeared.
- [7]Upon being satisfied that there had been service of the notice of adjournment fixing the trial date and service of the orders made 11 May 2023 by Her Honour Magistrate Hay, the defendants’ sought and were given leave to proceed pursuant to rule 476 (1) in default of attendance by the plaintiff and the defendants by counterclaim.
- [8]Orders were made that the first, second, and third defendants were given leave to establish entitlement to judgement by way of affidavit evidence already filed and served in the action.
THE PLAINTIFF’S MATERIAL
- [9]The pleadings in the action are:
- Statement of claim
- Defence of first, second, and third defendants.
- Counterclaim
- Reply by the plaintiff.
- Answer of the first and second defendants added by counterclaim to the counterclaim of the first, second, and third defendants.
- [10]The first defendant and each of the second and third defendants’ evidence is as follows:
- Affidavit of evidence in chief – Suzanne Burton – sworn 5 January 2023 (two volumes).
- Affidavit of evidence in chief – Liam Burton – affirmed 5 January 2023 (two volumes).
- [11]The evidence of each of the defendants Suzanne Burton and Liam Burton is extremely long, 521 pages and 464 pages respectively.
- [12]The court file, trial bundle, first, and second and third defendants’ counsels’ submissions and cases, is contained in two large plastic buckets and contains more than 2,000 pages.
- [13]The plaintiff and defendants added by counterclaim have not participated in the hearing and have put on no evidence.
- [14]The matter is heard and determined solely on the evidence of each of the second and third defendants (both of whom give evidence on behalf of the first defendant) and has not been the subject of any challenge (that is, there was no cross-examination on the affidavit evidence in chief of either witness noting the plaintiff and first and second defendants by counterclaim failed to attend the trial).
- [15]I proceed on the basis that in respect of the sworn and affirmed evidence respectively of the second and third defendants, that unless it is inherently unlikely on the face of the evidence (having due regard to the corroborative documentary evidence) that that evidence is unchallenged, and I ought make findings in favour of the first, second, and third defendants accordingly.
FIRST, SECOND AND THIRD DEFANDANTS OUTLINE OF ARGUMENT
- [16]The solicitors for the first, second and third defendants have provided a comprehensive (31 page) outline of argument. The outline conveniently directly identifies from the affidavit of each of the second and third defendants Suzanne Burton and Liam Burton (being their evidence in chief and the only evidence in these proceedings) by paragraph number and paginated and index exhibit the relevant portions of that evidence supporting the propositions contained in the outline.
- [17]I adopt and reference the comprehensive outline of argument of the first, second and third defendants in these reasons.
THE PLAINTIFF’S CLAIM
- [18]The plaintiff, bearing the obligation to prove on the balance of probabilities with evidence the material facts pleaded in the statement of claim giving rise to the claim and cause of cation having failed to put on any evidence, must fail.
- [19]The plaintiff’s claim against the first, second, and third defendants is dismissed.
THE COUNTERCLAIM – FIRST, SECOND, AND THIRD DEFENDANTS
- [20]The first, second, and third defendants counterclaims are brought on the basis of a breach of the Australian Consumer Law in particular, s 18 of the Australian Consumer Law (ACL)
- [21]Section 18 of the ACL provides: -
1)A person must not in trade or commerce engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
- [22]Section 4 of the ACL provides:
- Misleading representations with respect of future matters:
1)If:
- A person makes a representation with respect to any future matter (including the doing of or the refusing to do any act); and
- The person does not have reasonable grounds for making the representation the representation is taken for the purpose of this schedule to be misleading.
- For the purpose of applying ss 1 in relation to a proceeding concerning a representation made with respect to a future matter by: -
- A party to a proceeding; or
- Any other party;
The party or other person is taken not to have had reasonable grounds for making the representation unless evidence is adduced to the contrary.
- [23]In respect of a claim for damages arising out of a breach of the obligations imposed by the ACL, s 236 of the ACL provides:
Actions for damages:
1)If:
- A person (the claimant) suffers loss or damage because of the conduct of another person; and
- The conduct contravened a provision of Chapter 2 or 3;
The claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention.
- [24]The provisions of the ACL in circumstances where a party engages in conduct that is misleading or deceptive or is likely to mislead or deceive, including misleading representations in respect of future matters, give rise to a statutory cause of action in respect of which damages are recoverable.
THE REPRESENTATIONS
- [25]The defendants plead the relevant representations by the plaintiff in paras 1 – 3 and para 6 of the counterclaim.
- [26]The representations by subject matter are relevantly:
- Support representations (paras 1(a) and 2(b) of the counterclaim).
- Marketing representation (para 1(b) of the counterclaim).
- Profitability representations (paras 1(c), 2(a), 2(c), 3, and 6 of the counterclaim).
- [27]The affidavit evidence of the witness Suzanne Burton proves support representations made by the plaintiff, concerning what the plaintiff contended would be its ongoing support and assistance to the first defendant (and by dint the second and third defendants).[1]
- [28]Whilst the plaintiff’s and defendant by counterclaims pleadings deny the representations, the uncontroversial affidavit of evidence of both Suzanne Burton and Liam Burton prove that those representations were made.
THE MARKETING REPRESENTATIONS
- [29]The marketing representation pleaded by the defendants in the defence and counterclaim is simply the subject of a non-admission by the plaintiff and the defendants by counterclaim, but is proved by the Peak Physique Hot Yoga document.[2]
THE PROFITABILITY REPRESENTATIONS
- [30]Similarly, whilst the profitability representations pleaded by the defendants are simply the subject of a non-admission, it likewise is proved by the plaintiff’s own document (see footnote 2).
- [31]The plaintiff’s counsel’s written outline conveniently at paras 1.4 – 1.3.4 deals with the evidence contained in the affidavit evidence in chief of each of the first and second defendants, and I am satisfied that the first and second defendant’s evidence supports the contentions in that outline insofar as each of the support representations, marketing representations, and profitability representations are concerned.
REPRESENTATIONS ABOUT FUTURE MATTERS
- [32]The first, second, and third defendants’ pleaded case also pleads future representations falling within the scope of s 4 of the ACL.
- [33]Again, the plaintiff’s counsel outline at para 1.4 correctly identifies expressly the nature of those future representations and identifies the affidavit evidence in chief supporting those contentions.
- [34]The plaintiff and defendants by counterclaim have not put on any evidence and have failed to discharge the evidentiary onus of proving that there were reasonable grounds for making those representations.
RELIANCE
- [35]The plaintiff’s counsel outline at paras 1.5 and 1.5.1 direct the court to the relevant portions which I am satisfied prove reliance by each of the first defendant and second and third defendants in respect of the representations.
- [36]I find (accepting as correct the submissions concerning evidence that the representations are misleading) at paras 1.6, 1.6.2, and 1.6.3 of the plaintiff’s counsel’s representations that there is clear uncontroverted evidence my Ms Burton proving that the support representations, marketing representations, and profitability representations by the plaintiff and the first and second defendants by counterclaim were misleading.
DAMAGES
- [37]The defendants are entitled to loss and damage suffered by conduct done in contravention of s 18 of the ACL. The plaintiff’s counsel outline sets out uncontroversially the legal principles in respect of causation establishing that those damages are directly as a consequence of the misrepresentations of the plaintiff.
- [38]The loss and damage recoverable by the first, second, and third defendants respectively in the appropriate assessment principles are detailed in the plaintiff’s counsel’s outline at para 3.1.
- [39]The prima facie measure of damages recoverable under s 18 of the ACL in circumstances where, as here, on the uncontroversial evidence a party was induced to purchase a business is the difference between the purchase price paid and the value of the business at its acquisition.
- [40]The defendants have pleaded loss and damage with exceeds the maximum monetary jurisdiction of this court of $150,000.
- [41]The pleaded losses are as follows:
First defendant:
- Loss of franchise fee – $33,000
- Cost of renting out the business premises – $70,093.28
- Cost of acquisition of equipment – $3,433.82
- Trading losses – $95,380
- [42]The second and third defendants also claim unpaid wages in respect of their personal efforts working within the business respectively:
- Ms Burton – $45,000
- Mr Burton – $30,000
- [43]In the alternative the first defendant claims those unpaid wages as a liability accruing to it and owing to the second and third defendants respectively totalling $75,000.
- [44]The total of the damages therefore claimed by the first, second, and third defendants is $276,907.10.
- [45]The defendants abandon the claim to the extent that it exceeds the jurisdictional monetary limit of the Magistrates Court.
- [46]The affidavit evidence in chief of the second defendant and third defendant as identified in the plaintiff’s counsel’s outline prove uncontroversially each of the amounts claimed by way of damages by the first defendant.
- [47]There is detailed evidence in the affidavit evidence in chief of Ms Burton and Mr Burton proving the unpaid labour claim which is either payable to them or to the first defendant for liability for unpaid wages owing to them.
- [48]I am satisfied on the balance of probabilities that the affidavit evidence in chief of Suzanne Burton and Liam Burton prove those damages.
- [49]The first, second, and third defendants have succeeded on the balance of probabilities of proving their claims by way of counterclaim as against the plaintiff and the first and second defendants added by counterclaim who on the basis of the pleaded claim under the provisions of the ACL are jointly and severally liable for the loss and damage of the defendants.
- [50]I therefore give judgement for the first, second, and third defendants on the counterclaim as against the plaintiff and the first defendant by counterclaim and second defendant by counterclaim which on the proven loss total $276,907.10 is restricted to the monetary jurisdiction of this court of $150,000.
- [51]I give judgement for the first, second, and third defendants as against the plaintiff and the first defendant added by counterclaim and second defendant added by counterclaim in the sum of $150,000.
INTEREST AND COSTS
- [52]I direct that any submissions in respect of interest on the judgement debt or costs by the parties be filed within 10 days, the written submissions to not exceed 5 typed A4 pages.
Magistrate J. Pinder
Dated 01/08/2024